Mohd Effandi Bin Hj Yusoff

Faculty of Management and Human Resource

Development, UTM
What is Due Diligence?
Due Diligence
Due Diligence
 Due Diligence
Screening Due Diligence

Investment Fit – Investment

proposal is consistent Potential – to test
with the investment the viability of the
philosophy of the firm deals
-Management
-Stage of financing -Market
-Geographical -Product Service
-Size of the venture -Business model
-Industry
 Due Diligence
More deeper in scrutinizing Screening Due
Diligence – BUSINESS PERSPECTIVE

Using the same criteria in Screening Due

Diligence

Management Market

Business
Product
Model
 Extension of Due Diligence

• Without auditing the intangible assets the true

value of the deal cannot be determined
• Provide decision makers with information on
opportunities as well as potential problems
• Conventional Due Diligence: Greater emphasize
on hard assets
• The demand for ‘soft’ evaluation is deemed
necessary
 Due Diligence

Dimensions
and
Environments

Internal External
Dimensions and
Environments
Internal Environment
Dimensions and
Environments
External Environment
 Due Diligence Auditing
Process
Macro environment Industry history/trends

Legal Environment Organizational Documentation,

Contingent Liabilities,
Existing/potential hazards
Marketing Product positioning, consumer
loyalty, sales effectiveness

Production Efficiency of production process,

capacity, synergy
Management Quality of managers, organizational
structure, training, team, corporate
culture
Information system Hardware/software
Financial Historical/projection scenarios/tax
issues
 Due Diligence Auditing
Process
(1)Macro-Environment Audit

(2)Legal/Environment Audit

Target Acquisition
(3)Marketing Audit (7)Financial Audit
The P’s

(6)Information/System
(4) Production Audit (5) Management Audit
Audit